A Rare Occurrence In The Saudi Currency Market Tells You That Trouble Is Brewing In The Middle East

A Rare Occurrence In The Saudi Currency Market Tells You That Trouble Is Brewing In The Middle East

An important shift is developing in Saudi Arabian currency derivatives markets as Iran becomes engulfed in populist protests amid hyperinflationary pressures and armed conflict breaks out between Turkey and Syria, heightening concerns about tensions in the Middle East.

The 12-month forward rate on the Saudi Arabian riyal – or the difference between how many riyals traders think a dollar will be able to buy a year from now versus how many riyals a dollar can buy today – has been hovering just above zero for the past two weeks.

In other words, as pointed out by BNP's Bartosz Pawlowski, traders are expecting the riyal to depreciate against the dollar.

And that is something that almost never happens – unless markets are getting really worried about Saudi Arabia, one of the most stable countries in the region.

Re: A Rare Occurrence In The Saudi Currency Market Tells You That Trouble Is Brewing In The Middle East

Via The Lede and Business Insider, which has an eye-popping graph showing what’s happening to the rial right now. We’ve all got debate fee-vah tonight but I want to put this on your radar screen in case things start to spiral in Tehran. The point of nuclear sanctions was to put Iran’s economy in a vise so that public discontent would force the regime to either back down on uranium enrichment or risk destabilization from within. Here’s a destabilizing tremor now:

Clashes and at least one spontaneous protest erupted in Tehran on Wednesday over the plunging value of Iran’s currency, as black-market money-changers fought with riot police who were dispatched to shut them down, and hundreds of angry citizens demonstrated near the capital’s sprawling merchant bazaar, where many shops had closed for the day. The official media reported an unspecified number of arrests including two Europeans.

The clashes were the first instance of a violent intervention over the money-changing business in Tehran since the currency, the rial, which had been gradually losing value in recent years, dropped drastically over the past week, losing 40 percent of its worth against the dollar, to a record low…

“They spend billions of dollars to keep Syrian President Bashar al-Assad in power, but now they say they have no money!,” one garment seller screamed as he was cheered on by others, witnesses reported. A team from Iran’s state television was nearly attacked when its reporter turned to the camera saying that the people behind him had been upset over a robbery. [link to hotair.com]

Re: A Rare Occurrence In The Saudi Currency Market Tells You That Trouble Is Brewing In The Middle East

The Muslim Brotherhood plans to take Jordan next then Saudi Arabia will become their target.

Quoting: Anonymous Coward 24009796

I don't think they can take Jordan (or I hope not) because Jordan is one of the more civilized countries in the Middle East. As for Saudi Arabia, they'd have to have an unbelievable amount of spies embedded there to accomplish much of anything -- people thought Iraq was controlled -- Iraq under Hussein was nothing compared to the control the Saudi royalties cronies have over the Saudi people. I don't think Saudi Arabia could ever be taken over by the Muslim brotherhood.

“Most of my customers just look at products behind the window and pass,” said Behrouz Madani, 42, who owns a butcher shop in northwest Tehran. “I see them going to the next store, which is a bakery, to feed their families with bread.”

Iran’s rial is in a tailspin, having lost more than half of its value against the dollar in street trading in the past two months as U.S. and European sanctions aimed at curbing the country’s nuclear program bite. Riot police yesterday fired tear gas and sealed off parts of downtown Tehran after the currency’s plunge triggered street protests.

Security forces were also sent to the city’s bazaar after shopkeepers refused to open. The inflation rate, estimated by Parliament Speaker Ali Larijani at 29 percent last week, has accelerated to the point where the price of milk in Tehran rose 9 percent yesterday.

The economic situation has “reached a point where it becomes almost impossible not to show reaction,” said Anoush Ehteshami, professor of international affairs at Durham University in the U.K.

The rial is falling as sanctions eat into Iranian oil exports and foreign currency earnings. The currency dropped about 18 percent on Oct. 1, reaching 35,000 to the dollar on the unofficial market. The currency traded at 36,100 yesterday, the state-run Mehr news agency said, though traders in Tehran said most exchange houses have halted dealing in the greenback. That compares with the official value of 12,260 rials per dollar set by the central bank.Future Angst

Most Iranians can’t access that rate apart from some importers of essential goods such as medicines, meat and grains.

People “are nervous about tomorrow and next week because they don’t know how much more expensive things will be,” said Mostafa Daryani, 52, whose family owns a Tehran supermarket chain. “They only buy their daily needs and ignore most of the things that are not urgent for daily life. Instead of one bottle of milk, they buy two.”

Prices of home appliances have doubled in the past six months and some shopowners prefer to hoard goods rather than sell them in the hope that they can get higher prices in the future, said Yahya Ebrahimi, 48, who owns an electronics store in central Tehran. Merchants are increasingly using the dollar value of items as the basis for sales, he said. ...

Re: A Rare Occurrence In The Saudi Currency Market Tells You That Trouble Is Brewing In The Middle East

The head of the national police, Esmail Ahmadi Moghadam, was quoted by the Fars news agency as saying a special unit comprised of police chiefs and government economic officials had been created "to combat those perturbing the currency market."

He added that many people were keeping stashes of foreign currency and gold at home, "which is having a negative effect on the economy."

The crackdown was an apparent bid to halt a dramatic plunge in the value of Iran's currency this week.

On Tuesday, President Mahmoud Ahmadinejad said Western sanctions were mostly to blame. But rivals said his mismanagement of the economy was the main cause.

One money changer said almost no transactions were taking place in the market, making any valuation unreliable, but the assumption was the rial had stabilised early Wednesday at around 34,000 to the dollar.

Online websites that normally track the currency market were censored, none giving the rial's value against the dollar.

On Tuesday, the rial closed at around 36,100 to the dollar.

A week ago, it was trading at around 22,000 to the greenback and at 13,000 a year ago.

The money's plunge has greatly increased inflation in Iran, which is widely seen as far higher than the official 23.5 percent given by the central bank.

Food costs, notably, have spiralled, to the concern of Iranian families. Merchants, some of whom have lost millions of dollars in a day, say doing business has become nearly impossible.

The US government has said it sees the rial's plunge as proof Western sanctions are having a big impact on the Islamic republic's economy.

But Ahmadinejad said that, even with the "psychological war on the exchange market," Iran would not be pressured into curbing its nuclear activities -- the stated aim of the sanctions.

Re: A Rare Occurrence In The Saudi Currency Market Tells You That Trouble Is Brewing In The Middle East

The Muslim Brotherhood plans to take Jordan next then Saudi Arabia will become their target.

Quoting: Anonymous Coward 24009796

I don't think they can take Jordan (or I hope not) because Jordan is one of the more civilized countries in the Middle East. As for Saudi Arabia, they'd have to have an unbelievable amount of spies embedded there to accomplish much of anything -- people thought Iraq was controlled -- Iraq under Hussein was nothing compared to the control the Saudi royalties cronies have over the Saudi people. I don't think Saudi Arabia could ever be taken over by the Muslim brotherhood.

Quoting: Anonymous Coward 10327591

taken or...given?!?! when the Muslims unite and cut off the West's oil and use Pakistans nukes against Western cities and main USA/Nato bases in the region..WWIII on and Russia and China will help as they'll all 'cooperate'(commie word but true) in rebuilding what's left of the world while the whitey dies(and what's left becomes their sex slaves!! watch and see- all going to plan rather quickly! Jordan and Saudi Arabia are the linchpins that will unite the Muslim world- it will be epic w/all that military power we gave Egypt, Iran, Afghanistan etc...

Re: A Rare Occurrence In The Saudi Currency Market Tells You That Trouble Is Brewing In The Middle East

The Muslim Brotherhood plans to take Jordan next then Saudi Arabia will become their target.

Quoting: Anonymous Coward 24009796

I don't think they can take Jordan (or I hope not) because Jordan is one of the more civilized countries in the Middle East. As for Saudi Arabia, they'd have to have an unbelievable amount of spies embedded there to accomplish much of anything -- people thought Iraq was controlled -- Iraq under Hussein was nothing compared to the control the Saudi royalties cronies have over the Saudi people. I don't think Saudi Arabia could ever be taken over by the Muslim brotherhood.

Quoting: Anonymous Coward 10327591

taken or...given?!?! when the Muslims unite and cut off the West's oil and use Pakistans nukes against Western cities and main USA/Nato bases in the region..WWIII on and Russia and China will help as they'll all 'cooperate'(commie word but true) in rebuilding what's left of the world while the whitey dies(and what's left becomes their sex slaves!! watch and see- all going to plan rather quickly! Jordan and Saudi Arabia are the linchpins that will unite the Muslim world- it will be epic w/all that military power we gave Egypt, Iran, Afghanistan etc...

Re: A Rare Occurrence In The Saudi Currency Market Tells You That Trouble Is Brewing In The Middle East

The Muslim Brotherhood plans to take Jordan next then Saudi Arabia will become their target.

Quoting: Anonymous Coward 24009796

I don't think they can take Jordan (or I hope not) because Jordan is one of the more civilized countries in the Middle East. As for Saudi Arabia, they'd have to have an unbelievable amount of spies embedded there to accomplish much of anything -- people thought Iraq was controlled -- Iraq under Hussein was nothing compared to the control the Saudi royalties cronies have over the Saudi people. I don't think Saudi Arabia could ever be taken over by the Muslim brotherhood.

Quoting: Anonymous Coward 10327591

Prophecy says all muslim nations will be united by the muslim mahdi under the one flag of islam,the muslim brotherhood is the perfect vehicle to attain this state,these pre-ordained events are starting to take place in north africa and the middle east,soon the muslim brotherhood will become too large a steamroller to stop,and islam united under one leader will topple all of the middle east,north africa and even europe.Watch as prophecy unfolds,interesting times indeed.

Re: A Rare Occurrence In The Saudi Currency Market Tells You That Trouble Is Brewing In The Middle East

Prophecy says all muslim nations will be united by the muslim mahdi under the one flag of islam,the muslim brotherhood is the perfect vehicle to attain this state,these pre-ordained events are starting to take place in north africa and the middle east,soon the muslim brotherhood will become too large a steamroller to stop,and islam united under one leader will topple all of the middle east,north africa and even europe.Watch as prophecy unfolds,interesting times indeed.

Quoting: stormer

They may unite under one flag of islam but the only thing they'll achieve is getting their collective asses kicked !

Re: A Rare Occurrence In The Saudi Currency Market Tells You That Trouble Is Brewing In The Middle East

An important shift is developing in Saudi Arabian currency derivatives markets as Iran becomes engulfed in populist protests amid hyperinflationary pressures and armed conflict breaks out between Turkey and Syria, heightening concerns about tensions in the Middle East.

The 12-month forward rate on the Saudi Arabian riyal – or the difference between how many riyals traders think a dollar will be able to buy a year from now versus how many riyals a dollar can buy today – has been hovering just above zero for the past two weeks.

In other words, as pointed out by BNP's Bartosz Pawlowski, traders are expecting the riyal to depreciate against the dollar.

And that is something that almost never happens – unless markets are getting really worried about Saudi Arabia, one of the most stable countries in the region.

Re: A Rare Occurrence In The Saudi Currency Market Tells You That Trouble Is Brewing In The Middle East

The Muslim Brotherhood plans to take Jordan next then Saudi Arabia will become their target.

Quoting: Anonymous Coward 24009796

I don't think they can take Jordan (or I hope not) because Jordan is one of the more civilized countries in the Middle East. As for Saudi Arabia, they'd have to have an unbelievable amount of spies embedded there to accomplish much of anything -- people thought Iraq was controlled -- Iraq under Hussein was nothing compared to the control the Saudi royalties cronies have over the Saudi people. I don't think Saudi Arabia could ever be taken over by the Muslim brotherhood.

Quoting: Anonymous Coward 10327591

taken or...given?!?! when the Muslims unite and cut off the West's oil and use Pakistans nukes against Western cities and main USA/Nato bases in the region..WWIII on and Russia and China will help as they'll all 'cooperate'(commie word but true) in rebuilding what's left of the world while the whitey dies(and what's left becomes their sex slaves!! watch and see- all going to plan rather quickly! Jordan and Saudi Arabia are the linchpins that will unite the Muslim world- it will be epic w/all that military power we gave Egypt, Iran, Afghanistan etc...